Wednesday’s a busy day for economic news, including the August update of the UK Services Purchasing Managers Index (PMI). We’ll also see critical Eurozone reports today: the second revision for second-quarter GDP and the retail sales report for July.
UK Services PMI (08:28 GMT) The incoming data on Britain’s economy continues to trend positive, as the numbers released so far this week show. Manufacturing activity improved again in August, according to Monday’s CIPS/Markit Manufacturing PMI update (pdf). In addition, yesterday’s PMI data on construction reflected the “sharpest expansion” in nearly six years (pdf). Will today’s August report on the CIPS/Markit PMI Services Index make it three-in-a-row this week? Not quite, according to the consensus forecast.
Economists think we’ll see a modest pullback in the services sector’s purchasing managers index for last month to 59.8 versus the previously reported 60.2 for July. Even so, a retreat in today’s number won’t change the big picture for the UK: recovery remains firmly rooted. That’s certainly clear in the services PMI trend in recent months, which jumped to a six-year high in the July release. Today’s news probably won't alter the broad trend. No wonder the Organisation for Economic Cooperation and Development yesterday nearly doubled its 2013 growth forecast for Britain to 1.5 percent from the previous 0.8 percent estimate.
EU GDP (09:00 GMT) Last month’s flash estimate of second-quarter GDP (pdf) was the critical factor that persuaded the market to assume that the Eurozone had finally escaped from the clutches of recession. It’s a precarious escape, to be sure, but the fact that GDP shifted into growth mode was hailed as a turning point nonetheless. Accordingly, today’s second estimate for Q2 GDP will be widely analysed for any changes relative to the earlier release. But, according to analysts, no change is expected in today's revision.
Economists think that the pace of growth will remain at 0.3 percent for this year’s April-through-June quarter versus. the previous period. But with a wide range of economic and financial conditions still weighing on the individual countries through the Eurozone, confidence is thin that the nascent rebound implied in Q2 GDP is a genuine sign of recovery. If today’s GDP update manages to hold on to the 0.3 percent increase, as expected, the optimists will have a minor victory over the dark forces of revision risk, at least for a day.
EU Retail Sales (09:00 GMT) Released simultaneously with today’s EU GDP revision, the July retail sales report promises to be the more valuable of the two numbers. Indeed, if today’s second-quarter GDP estimate holds at 0.3 percent, the next question is how the hard data compares in the third quarter? Today’s retail sales release will be closely reviewed in search of guidance.
For the moment, optimism prevails. The market’s looking for some improvement for retail spending at the start of the third quarter. The consensus forecast sees a 0.3 percent rise in sales volume, which would be an encouraging rebound from June’s hefty 0.5 percent slide. The case for thinking positively also draws strength from recent updates to the Markit Eurozone Retail PMI, which has increased in each of the last four monthly updates through August (pdf).
Given this trend, it would be surprising, and more than slightly disappointing, to see Eurozone retail sales suffer a major downside surprise in today’s release. Nonetheless, Friday’s release of provisional data for Germany’s retail sales in July suggests caution, courtesy of an unexpected drop of 1.4 percent versus June for Europe's leading economy.
UK Services PMI (08:28 GMT) The incoming data on Britain’s economy continues to trend positive, as the numbers released so far this week show. Manufacturing activity improved again in August, according to Monday’s CIPS/Markit Manufacturing PMI update (pdf). In addition, yesterday’s PMI data on construction reflected the “sharpest expansion” in nearly six years (pdf). Will today’s August report on the CIPS/Markit PMI Services Index make it three-in-a-row this week? Not quite, according to the consensus forecast.
Economists think we’ll see a modest pullback in the services sector’s purchasing managers index for last month to 59.8 versus the previously reported 60.2 for July. Even so, a retreat in today’s number won’t change the big picture for the UK: recovery remains firmly rooted. That’s certainly clear in the services PMI trend in recent months, which jumped to a six-year high in the July release. Today’s news probably won't alter the broad trend. No wonder the Organisation for Economic Cooperation and Development yesterday nearly doubled its 2013 growth forecast for Britain to 1.5 percent from the previous 0.8 percent estimate.
EU GDP (09:00 GMT) Last month’s flash estimate of second-quarter GDP (pdf) was the critical factor that persuaded the market to assume that the Eurozone had finally escaped from the clutches of recession. It’s a precarious escape, to be sure, but the fact that GDP shifted into growth mode was hailed as a turning point nonetheless. Accordingly, today’s second estimate for Q2 GDP will be widely analysed for any changes relative to the earlier release. But, according to analysts, no change is expected in today's revision.
Economists think that the pace of growth will remain at 0.3 percent for this year’s April-through-June quarter versus. the previous period. But with a wide range of economic and financial conditions still weighing on the individual countries through the Eurozone, confidence is thin that the nascent rebound implied in Q2 GDP is a genuine sign of recovery. If today’s GDP update manages to hold on to the 0.3 percent increase, as expected, the optimists will have a minor victory over the dark forces of revision risk, at least for a day.
EU Retail Sales (09:00 GMT) Released simultaneously with today’s EU GDP revision, the July retail sales report promises to be the more valuable of the two numbers. Indeed, if today’s second-quarter GDP estimate holds at 0.3 percent, the next question is how the hard data compares in the third quarter? Today’s retail sales release will be closely reviewed in search of guidance.
For the moment, optimism prevails. The market’s looking for some improvement for retail spending at the start of the third quarter. The consensus forecast sees a 0.3 percent rise in sales volume, which would be an encouraging rebound from June’s hefty 0.5 percent slide. The case for thinking positively also draws strength from recent updates to the Markit Eurozone Retail PMI, which has increased in each of the last four monthly updates through August (pdf).
Given this trend, it would be surprising, and more than slightly disappointing, to see Eurozone retail sales suffer a major downside surprise in today’s release. Nonetheless, Friday’s release of provisional data for Germany’s retail sales in July suggests caution, courtesy of an unexpected drop of 1.4 percent versus June for Europe's leading economy.